Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models

Yi Hu, Jin Xiao, Ying Deng, Yi Xiao and Shouyang Wang

Journal of Air Transport Management, 2015, vol. 42, issue C, 95-100

Abstract: This paper applies recent panel methodology to examine the short-run dynamics, the long-run equilibrium relationships and the Granger causal relationship between economic growth and domestic air passenger traffic. It is based on the quarterly panel data of 29 provinces in China from the period of 2006Q1 to 2012Q3. Tests for panel unit roots, cointegration in heterogeneous panels and panel causality are employed in a bi-variate panel vector error correction model (PVECM), which is estimated by the system generalized moment method (SYS-GMM). The results show evidence of a long-run equilibrium relationship between economic growth and domestic air passenger traffic. Specifically, 1% increase in the air passenger traffic is found to lead to an increase of 0.943% in real gross domestic product (GDP). A long-run and strong bi-directional Granger causal relationship is found between these two series. It is also found that there is a short-run uni-directional Granger causality running from the domestic air passenger traffic to the economic growth.

Keywords: Air passenger traffic; Economic growth; Heterogeneous panels; Panel Granger causality (search for similar items in EconPapers)
JEL-codes: C23 L93 R41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:42:y:2015:i:c:p:95-100

DOI: 10.1016/j.jairtraman.2014.09.003

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